The popularity and adoption of cryptocurrency, blockchain technology and decentralized finance is opening new financial doors for developers, investors, gamers and traders alike. And a ripple effect of crypto’s adoption is that bitcoin’s price, as well as other altcoins, will increase.
The growing need for a decentralized financial system and web3.0 is great news for bitcoin because it means more people are willing to buy bitcoin, taking the bet with other newer technologies such as decentralized apps, DAO, and decentralized exchanges. And oh, there are NFTs too, the coolest member of the decentralized and digitized family.
Recent increased activity of the bitcoin blockchain is indicative of where the future of finance is headed: decentralized finance.
While bitcoin doesn’t offer the absolute best solutions to centralized questions and how to beat them, the blockchain technology opened the floodgates for other blockchain technology such as ethereum, solana, polkadot etc.
Technical indicators on the bitcoin price graph shows that the price of bitcoin will only increase in the coming years, some even predicting that it will get to $100,000 before the end of the year, an all-time high. The recent ascent, which saw bitcoin’s price go as high as $67,000, is only but a tip in the iceberg of where bitcoin is going.
The future looks so damn bright for bitcoin and cryptocurrencies.
But what’s the reason behind the ascent, and what indicators show that the price of bitcoin will only increase? Did the price just go up — and promises to increase — just because people wanted it to?
The price of bitcoin rose by 30% in October on redot crypto exchange, surpassing Ethereum’s price increase. The price increase as well as adoption was not the only positive during October; the number of activities on the bitcoin blockchain increased by 19%.
What does an increase in blockchain activity mean?
Simple: More people are getting involved with bitcoin, therefore more miners are trying to solve mathematical equations to mine bitcoin.
The increase in active market, according to Glassnode, is when the similar addresses controlled by the same network, e.g. private or public blockchain, are carrying out transactions on the bitcoin blockchain.
The reason behind the increase in the active market can be tied to several factors, but the most important reason is that big financial institutions are buying bitcoin.
And why are these institutions buying bitcoin?
They are betting on bitcoin becoming a mainstay in the financial market, even replacing fiat currency as we know it. Many institutions see the potential of digital currencies and the cravings for decentralized finance, and are hedging their funds with bitcoin since it is the first cryptocurrency and the best store of value right now.
When one looks at the stats, there is a sharp increase in the number of active markets — increased buying and selling — the highest on bitcoin blockchain in more than five months. When there is a substantial increase in active markets, the record shows, the price of bitcoin will increase significantly. The 2020 price increase gives us a good reference point.
At the end of 2020, the number of active markets increased significantly, and bitcoin’s price followed with a shot in the arm, increasing in turn.
This prediction of bitcoin’s price increasing in the coming months is true because its price reached $67,000, an all time high.
ON-CHAIN TRANSACTIONS INCREASED
On-chain transactions are financial transactions that miners on the blockchain approve using a series of codes called hash. These miners must agree that the transaction initiated by someone is legit, and after they’ve approved it, the transaction appears on the open ledger, on the blockchain. With this type of transaction, 51% of participants on the network must agree to the validity of the transaction before it is approved as legit and recorded on the ledger.
With on-chain transactions, the ‘confirmation time’ is longer and the fees are higher, thereby making it unhealthy to the environment and expensive for traders.
As more big financial institutions adopt bitcoin, the on-chain transaction has increased from 0.6 BTC to 1.3 BTC.This is worrying for environmental activists.
WHAT DOES INCREASED ON-CHAIN TRANSACTION MEAN?
With increased on-chain transactions, the price of bitcoin will not increase automatically. There is no direct correlation between more people transacting bitcoin on the blockchain and the price increasing; however, the increase is a clear indication that more bitcoins are being transacted, that institutions are carrying million dollar transactions on the network.
Therefore, if more institutions are carrying out huge amounts of bitcoin transactions, it means the adoption is spreading, and soon, bitcoin and cryptocurrencies will be accepted as official currencies in countries and international markets.
TECHNICAL DATA PREDICTS THAT THE UPTREND WILL CONTINUE
On-chain data, which has been bullish for a while now, on bitcoin usd tradingview, showed that the moving averages – 100-Day Moving Average and the 200-Day Moving Average – have experienced a bullish run. The last time a bullish crossover happened was more than 16 months ago.
So, what is a bullish crossover and what does it mean for the market and the price of bitcoin?
When the 200-day MA rises above the 100-day MA, it is called a bull cross. Bull crosses indicate the possibility of a bearish or bullish market. Bitcoin price history proves that an uptrend is likely to happen.
Something similar to the current bull price cross happened in June 2020 after there was a bullish cross in May 2019, which caused the price of bitcoin to rise from $8,300 to $64,300. It was a 10-month bull run.
CAN WE TRUST THE CROSSOVER?
For traders and investors on Redot.com, there is increased anticipation that bitcoin’s price will continue the bullish run and hit a new ATH.
But there are no guarantees.
However, bitcoin price history shows that long-term moving averages are not good enough technical indicators in and of themselves to predict where the market will head.
There is a need to combine the bull crosses with other tools such as the MACD, Ichikimo clouds and other technical tools when analysing the crypto future swing of the market.
The unpredictability of the 100 and 200-Day MA was in full swing in mid-July when bitcoin bottomed at #30,000 after bearish cross just weeks before.
HOW NETWORK ADOPTION’S INCREASE AS WELL AS PRICE’S CONFIRMS AN UPTREND
Bitcoin has, over the years, increased in its price despite the criticisms about its usefulness. As more people get involved with cryptocurrency, and big businesses adopt bitcoin as a legal tender, the price of bitcoin will increase.
Because the price of an asset is dependent on the perceived value. If people value an asset at $400, then the asset is worth $400, whether or not anyone else thinks the price should be more or less.
Many cryptocurrency enthusiasts and investors have been clamouring for bitcoin and altcoins to be accepted in the mainstream financial sector, and we are seeing it right before our eyes: the mass adoption of bitcoin.
Bitcoin, it seems, has moved past the early adopters stage. More institutions are trusting bitcoin, buying million dollars of it. For whales and institutions, buying an asset means they believe the asset has potential to be profitable in the nearest future.
The series of bans from countries have done little to derail the world from seeing the power of decentralized financial systems. More and more big industry players are entering into the cryptocurrency space, for example, Facebook and Mastercard.
The change of name from Facebook to Meta is a big indication that NFTs and blockchain technology will rule the future.
And the one currency that would lead the way, given it is the first digital currency built on blockchain technology that has wide acceptance is bitcoin.
The big banks and lending institutions are buying bitcoin, using it as a hedge over their investments. Investment banks are investing in bitcoin-related companies. Bitcoin ETFs are on their way in the United States.
These factors show that bitcoin is no longer just ‘digital currency for the poor’; even the rich are seeing its importance.
As technology evolves and web3.0 greets us all, bitcoin will lead the way, at least in the next five to ten years.
So, as investors and traders wait for bitcoin to reach $100,000 before the end of 2021, and more hope that swings will be less often so that there will be stability, bitcoin has come to stay. The uptrend will continue, with bumps in the way.